Difference between Internet and Traditional Banking

Internet Banking and Traditional Banking are the two different forms of Banking. Customers of
the bank can use these platforms to withdraw money or conduct financial operations. The most
essential aspect of online banking is that it is constantly available, allowing you to manage your
accounts from any location and at any time. Using mobile apps, you may pay bills or check your
bank balance. Some online banks even send mobile text alerts to customers so they can keep
track of their payments. The most essential aspect of online banking is that it is constantly
available, allowing you to manage your accounts from any location and at any time. Using
mobile apps, you may pay bills or check your bank balance. Some online banks even send
mobile text alerts to customers so they can keep track of their payments.

Traditional banking is focused with going to a physical location to access your account.
Although some conventional banks enable you to access your accounts online, you may still
need to visit the bank to verify your identification or submit documentation. Traditional banking
is focused with going to a physical location to access your account. Although some conventional
banks enable you to access your accounts online, you may still need to visit the bank to verify
your identification or submit documentation.

So, what exactly is Internet Banking?

Customers may save time and have complete control over their financial activities and
obligations by using internet banking. According to statistics, 6,110,000 families utilize the
Internet for their everyday banking requirements.

The services of online banking are the most important driver of financial institution selection for
internet banking consumers.

For educated and busy people who don't have much time to go to banks for their financial needs,
Internet banking is the most outstanding technology. Customers can utilize Internet banking to
complete their daily banking operations. Eighty-six percent of people earning more than Rs57,
03,191.25 use Internet banking.

Important Internet Banking Motivators-

 Convenience

 Control

 Cost-cutting
  These motivators are the primary cause that directs the consumer to the adoption of
Internet Banking. According to research, in 2007, 30% of the online bankers have stated
that they have joined internet banking to save their time. These internet bankers want to
easily obtain immediate access to their accounts to conduct activity from any part of the
world at any time. Customers want to avoid their cost and time in making trips to the
bank to withdraw money, or to perform their other banking transactions.

What is Traditional Banking?

Traditional banking is a financial institution that is committed to the management of the money
that their client’s deposit in the bank custody and on the other hand the bank utilizes that money
to grant it as a loan to individuals or companies (charging them interest).

Traditional banking resists e-security threats. Nowadays many cases came forward associated
with e-banking. Traditional banking is secured banking these days as e-banking is the tempting
target for hackers.

Traditional Banking consists of 3 components:

1. Capital

2. Deposits

3. Loans

Capital is the main support of traditional banking. All banks are laid upon the foundation of
capital. This capital money is then prudently converted into loans that give rise to employment
and economic development.

Deposits, once the capital is invested, it is supported through the accumulation of deposits that
constitutes the savings and liquid cash reserves of individual persons and business communities.
Deposits are insured up to 250,000 by the US government Federal Deposit Insurance
Corporation (FDIC).

Loans are the union of capital and FDIC secured deposits that account a basis for the amount of
money that can be disbursed into loans.

Traditional Banking vs. Internet Banking

The key difference between Internet Banking and Traditional Banking is that Internet Banking
allows you to send money to anybody, anywhere in the world, using only your phone or a
computer with an internet connection. Traditional banking is involved with physically moving
money from banks.

Parameter of
Internet Banking Traditional Banking
Comparison
Customers can have Customers can have a direct face to
Contact only electronic or face communication from their
online contacts. bankers.
In traditional banks, the employees
In online banking, the
and staff members of the bank can
customers of the bank
Customer attend only a limited number of the
don’t have to stand in
service customers. And customers have to
lines to perform their
stand in line to perform their banking
banking transactions.
transactions.
No costs are incurred
There are many operating and fixed
in Internet banking as
Costs costs that are incurred by traditional
they do not have a
banks.
physical appearance.
Customers can operate
their accounts anytime, Customers have to visit the bank for
Accessibility
anywhere using their their work only in working hours.
mobile phones.
Internet banking is not
a time taking process as Traditional banking drains a lot of time
customers do not have from the customers as they have to
Time
to visit their branches visit their branch to obtain access to
to operate their their accounts.
accounts

Conclusion
Both Internet Banking and Traditional Banking offer unique features that are essential for
consumers to access and operate their accounts.

Traditional banking serves customers physically, so it takes a long time to complete bank
transactions such as checking bank balances and transferring money from one account to
another. Internet banking, on the other hand, does not serve customers physically because
services are provided online, making it more efficient.